On September 1, the new universal social security regulations in mainland China took effect, sparking resistance in various regions. Some companies have been handing out “Voluntary Waiver of Social Insurance Application Forms” or “Employee Voluntary Self-Payment Social Security Agreements”, requiring workers to sign, shifting the payment that should be borne by the employer onto the individual. Lawyers point out that such practices have no legal validity. Some bosses lamented that the new social security regulations are like a meat grinder, leaving no room for any profit.
Recently, several circulated agreements on the internet contain similar content: employees must declare voluntary waiver or self-payment of fees, commit to no longer seeking reimbursement from the company, and even guaranteeing personal responsibility for work-related injuries, illnesses, or retirement risks due to lack of insurance coverage. The agreements typically end with a highlighted phrase: “Have you signed?” Many workers have bluntly stated that this is not a choice, but coercion.
Zong Shuli, a labor rights activist in Gongming Town, Shenzhen, told Epoch Times that he has received numerous complaints from migrant workers. Companies have urgently issued agreements just before the new regulations take effect, demanding workers to return signed copies the next day, or they will not be scheduled for work. He stated, “Workers have told me that they are clear in their hearts; signing provides no guarantees. But if they don’t sign, they risk losing their jobs. How can this be considered voluntary? This is simply disguised coercion. In reality, everyone knows that companies are trying to evade social security obligations. If something happens, the court will not recognize these agreements, they simply won’t hold up in court.”
In the construction industry in mainland China, a medium-sized construction contractor in Jiangsu named Mr. Zhu expressed that apart from providing kickbacks to superior contractors, they also need to pay personal social security, which creates significant pressure. He said, “If we truly follow the regulations, we will lose all profits. This new regulation is like a meat grinder – either the money comes from the company or the workers, someone has to foot the bill.”
According to data released by the Ministry of Human Resources and Social Security of the Communist Party of China, the participation rate of migrant workers in the construction industry in social security has been consistently below 30%. Although the new regulations emphasize comprehensive protection of workers, under cost pressures, companies are widely seeking legal loopholes.
Micro-business owners are also feeling the pressure. In a community in Longgang, Shenzhen, supermarket owner Mr. Huang stated that previously, he hired two assistants with a monthly salary of around 4,000 yuan each. However, with the new regulations in place, they now need to pay an additional 1,200 yuan per month per person for social security, along with over 400 yuan in personal contributions, totaling over 1,600 yuan in expenses. He shared, “When I did the math, the costs exceed the profits. How can I afford to hire more people? It’s just my wife and I taking turns running the store day and night.”
Mr. Huang mentioned that over thirty similar small shops in the area are facing the same dilemma. He explained, “We don’t earn much in a month, it’s almost the same as being an employee. No wonder many people are switching to online businesses, saving on labor costs and not having to worry about social security.”
An unnamed economist in Beijing believes that while the original intention of the social security system was to protect the basic rights of workers, many issues have arisen during its implementation. He stated, “Businesses need to survive, workers need protections, and policies need to be implemented, it’s difficult to satisfy all three simultaneously. Without governmental relief or subsidies, companies will inevitably seek ways to avoid compliance.”
A lawyer in Guangzhou, Mr. Liu, cautioned that according to the Social Insurance Law Article 58 and the Labor Contract Law Article 72, employers are legally required to pay social security for employees and cannot exempt themselves from this obligation through any form of agreement. He told reporters, “Even if workers sign a waiver, courts may still deem it invalid. Companies relying on such agreements to shift responsibility will ultimately have to make retroactive payments, pay late fees, and their credibility will be damaged.”
On August 1, the Supreme People’s Court of the Communist Party of China issued the “Interpretation on the Application of Laws in Labor Dispute Cases (II)”, which will take effect on September 1. Article 19 of the judicial interpretation stipulates that agreements between employers and workers to “not pay social security” or commitments signed by workers to waive obligations are all considered invalid. Workers can use this as grounds to terminate their employment contracts and demand compensation.
Legal scholars have indicated that the official judicial interpretation only applies to employees who have established a formal labor relationship and doesn’t extend to non-employed individuals, voluntary participants in social security, or retired reemployed individuals. As a result, there has been a trend in the food and beverage industry of recruiting retired personnel.